DCIT, Circle-14(1), New Delhi v. M/s. Poddar Pigments Ltd
[Citation -2016-LL-1005-64]

Citation 2016-LL-1005-64
Appellant Name DCIT, Circle-14(1), New Delhi
Respondent Name M/s. Poddar Pigments Ltd.
Court ITAT-Delhi
Relevant Act Income-tax
Date of Order 05/10/2016
Assessment Year 2007-08
Judgment View Judgment
Keyword Tags furnishing of inaccurate particular • disallowance of depreciation • deduction of tax at source • tax sought to be evaded • long-term capital gain • concealment of income • imposition of penalty • non-deduction of tax • deduction of royalty • plant and machinery • technical know-how • technical default • foreign national • tax free income • business profit • legal provision • statutory form • non-resident • pe in india • evade tax
Bot Summary: The submission made by the assessee that the assessee was not liable for levy of penalty, were not considered by the Assessing Officer and he levied the penalty of Rs.18,68,590/- under section 271(1)(c) of the Act on 29/03/2012 equivalent to the 100 of the tax sought to be evaded by the assessee. The Ld. CIT(A) confirmed the disallowance which was upheld by the Hon'ble ITAT vide Para 5.7 of its order only for the reason that reliance of assessee on Article 7 of Indo-German Treaty is not tenable in as much as assessee has failed to demonstrate that non-resident was conducting any business in India. Gujarat High Court in case of CIT Vs. LG Chaudhary 215 Taxman 95 where AO imposed penalty on assessee u/s 271(l)(c) for not deducting and depositing TDS on time, held that where there was no concealment of income or furnishing of inaccurate particulars of income by assessee, nonpayment of TDS being a technical default; deletion of penalty was justified. The Assessing Officer has nowhere stated that the assessee has furnished false and fabricated bills or claimed expenditure which was not related to the business of the assessee. Before the Assessing Officer, the assessee explained that at the time of filing of return, the assessee was expecting that the CBDT would clarify to the BSE on the matter of STT but no such clarification was issued and as a result of which STT was paid on the sale of shares, accordingly, the assessee offered the long-term capital gain for taxation in the course of assessment proceeding. The learned Commissioner of Income-tax held that no inaccurate particulars of income has been filed by the assessee and there is no concealment made by the assessee and hence no penalty under section 271(1)(c) of the Act was attracted in the case of the assessee. Further, the assessee substantiated the explanation with necessary evidence and explanation filed is bonafide and all the facts 14 ITA No. 2219/Del/2014 AY: 2007-08 relating to the explanation and material to the computation of income on the issue have been disclosed by the assessee.


IN INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. O.P. KANT, ACCOUNTANT MEMBER ITA No. 2219/Del/2014 Assessment Year: 2007-08 DCIT, Circle-14(1), New Delhi Vs. M/s. Poddar Pigments Ltd., A- 283, Ground Floor, Okhla Indl. Area-1, New Delhi. PAN : AAACP1125E (Appellant) (Respondent) Appellant by Sh. F.R. Meena, Sr.DR Respondent by Sh. P.C. Parwal, FCA Date of hearing 08.08.2016 Date of pronouncement 05.10.2016 ORDER PER O.P. KANT, A.M.: This appeal by Revenue is directed against order dated 15/01/2014 passed by learned Commissioner of Income-tax (Appeals) for assessment year 2007-08, wherein he allowed appeal of assessee against order of Assessing Officer dated 29/03/2012 levying penalty under section 271(1)(c) of Income-tax Act, 1961. grounds of appeal raised by Revenue are as under: i. On facts and circumstances of case, learned Commissioner of Income Tax (Appeals) erred in deleting penalty made by Assessing Officer u/s 271(1)(c) of Act on account of additions under head of u/s 40(a)(i) amounting to Rs.9,14,191/- and LTCG amounting to Rs.41,62,154/- holding that assessee has not furnished any inaccurate particulars or has made any deliberate attempt to conceal income. ii. On facts and circumstances of case, learned Commissioner of Income Tax (Appeals) erred in deleting above 2 ITA No. 2219/Del/2014 AY: 2007-08 said penalty ignoring fact that quantum addition on disallowance u/s 40(a)(ia) of Act was confirmed by first appellate authority and assessee did not contest on issue of LTCG. iii. appellant craves to be allowed to add any fresh grounds of appeal and/or delete or amend any of grounds of appeal. 2. facts in brief of case are that in case of assessee assessment under section 143(3) of Income Tax Act, 1961 (in short Act ) was passed on 18/09/2009 assessing total income at Rs.3,83,03,325/- as against returned income of Rs.3,55,15,180/-. assessing officer also initiated penalty proceedings under section 271(1)(c) of Act .The additions/disallowances made by Assessing Officer was confirmed by learned Commissioner of Income Tax (Appeals) vide his order dated 26/07/2010. Assessing Officer issued show cause for levy of penalty on additions disallowances confirmed by learned Commissioner of Income Tax (Appeals). submission made by assessee that assessee was not liable for levy of penalty, were not considered by Assessing Officer and he levied penalty of Rs.18,68,590/- under section 271(1)(c) of Act on 29/03/2012 equivalent to 100% of tax sought to be evaded by assessee. Aggrieved, assessee filed appeal before learned Commissioner of Income-tax (Appeals), who vide impugned order dated 15/01/2014 allowed appeal of assessee deleting penalty under section 271(1)(c) of Act on all issues of addition/disallowances. Aggrieved, by order of learned Commissioner of Income-tax (Appeals), Revenue is in appeal raising grounds as reproduced above. Revenue is in appeal against deletion of penalty only on two issues. first issue is in respect of penalty under section 271(1)(c) on addition of Rs.9,14,191/- under section 40(a)(i) of Act. second issue is in respect of penalty under section 271(1)(c) of Act on long-term capital gain 3 ITA No. 2219/Del/2014 AY: 2007-08 amounting to Rs.41,62,154/- which was not contested by assessee before appellate authorities. 2.1 facts in respect of first issue are that penalty in respect of disallowance of Rs.9,14,191/- under section 40(a)(i) of Act was levied by Assessing Officer on following three amounts: (i) payment of Rs.4,43,363/- made to M/s. Coperion Werner & Pfleiderer (ii) payment of Rs. 4,44,690/- made to Dr UK Thiele (iii) depreciation of Rs. 26,138/- claimed on payment of Rs. 1,74,254/- made to M/sHenchal Industrietichik for supervision and direction of machines. 2.2 While levying penalty, Assessing Officer observed as under: 3.1.4 Here it is important to note that it is not case where claim of deduction was disallowed in year but was allowable/allowed in subsequent year. Rather, in this case, since no tax was deducted at all at any point of time, even at later date, this amount was never allowable to assessee at any point of time even in future. Further, income of recipient as received by it/him from assessee was taxable in India which would have been either offered by him to tax or at least TDS made would have gone to government exchequer. However, because of assessee s fault of non-deduction of tax, no tax could be realized from recipient as it/he is foreign national. Thus, assessee by its act also caused loss of revenue which was otherwise realizable from recipient of income. 2.3 Before learned Commissioner of Income-tax (Appeals), assessee filed submission, which are reproduced by learned Commissioner of Income-tax (Appeals) as under: AR of appellant submitted as under: "Submission:- A.Penalty in respect of disallowance u/s 40(a)(i) of Rs.8,88,053/- (Rs.4,43,363 + Rs.4,44,690) 4 ITA No. 2219/Del/2014 AY: 2007-08 1. assessee made payment of Rs. 4,43,363/- to M/s. Coperion Werner & Pfleiderer in respect of process training conducted by it at assessee's premises between 07.08.2006 to 11.08.2006. From this non-resident, assessee has purchased plant and machinery from time to time. machines purchased by assessee were not working at optimum level and therefore on complaint by assessee, supplier of machine sent its engineer to provide process training. assessee has not deducted tax on this payment as according to it, it is payment of business profit under Article 7 of DTAA with Germany and since nonresident has no PE in India, no income has accrued or arisen in India. AO observed that payment made by assessee to non- resident is in respect of fees for technical services under Article 12 of DTAA with Germany and since assessee has not deducted tax at source, expenditure is disallowed u/s 40(a)(i). Ld. CIT(A) confirmed disallowance which was upheld by Hon'ble ITAT vide Para 5.7 of its order only for reason that reliance of assessee on Article 7 of Indo-German Treaty is not tenable in as much as assessee has failed to demonstrate that non-resident was conducting any business in India. 2. assessee in terms of Technical and Research Agreement dated 01.09.2006 with Dr. U. K. Thiele paid Rs 4,44,690/- towards devolvement and production of new products. Dr. U. K. Thiele is Scientist. This payment was made without deduction of tax at source as according to assessee payment was made for independent scientific activities which fall in Article 14 of DTAA with Germany and since non-resident has no fixed base in India nor his stay in India has exceeded 120 days, no income has accrued or arisen in India. AO held that Article 14 only covers independent scientific, literary, artistic, educational and teaching activities. payment made to Dr. U. Thiele does not fall in above category. payment made to him is for rendering technical services which falls in Article 12. Accordingly, he made disallowance u/s 40(a)(i). Ld. CIT(A) confirmed disallowance which was upheld by Hon'ble ITAT vide Para 6.6 of its order bv holding that Article 14 of DTAA is not applicable in as much as assessee has failed to demonstrate that services rendered by Dr. U. Thiele are independent scientific services. 3. From above, it can be noted that in course of assessment proceedings, assessee has furnished complete details in respect of above payments. No particulars were concealed or any 5 ITA No. 2219/Del/2014 AY: 2007-08 inaccurate particulars were furnished. assessee was under bonafide belief that payment is of business profit/independent scientific activities and therefore no income has accrued to non- resident so as to call for withholding tax u/s 195. It is not case of any of authorities that explanation of assessee is false or malafide. It is case of difference in interpretation as to whether payment is of business profit/independent scientific activities or fees for technical services. Hon'ble ITAT has upheld disallowance only for reason that assessee has failed to demonstrate applicability of Article 7/14 of DTAA with Germany. Hence, on such interpretational difference and particularly when disallowance is made u/s 40(a)(1), penalty u/s 271(l)(c) is not leviable as per various case laws referred below:- Tanushree Basu Vs. ACIT (2013) 36 CCH 089 (Mum.)(Trib.) It was fact that assessee had claimed expenses & same were disallowed by AO while completing assessment u/s 143(3) of Act on ground that assessee failed to deduct TDS. It was observed that genuineness of claim of assessee had not been disputed by department Therefore, it could not be said that assessee had claimed expenses which were false or not genuine. Assessee had furnished all relevant facts concerning claim made by it in return filed. It was held that AO had levied penalty in respect of said amount merely because said claim of assessee was disallowed u/s 40(a)(ia) of Act as assessee failed to deduct TDS thereon. In case of CIT vs. Reliance Petro products P. Ltd., 322 ITR 158(SC) it was held that mere making of claim which was not sustainable in law, by itself will not amount to furnishing inaccurate particulars of income. It was held that, in present case, admittedly, assessee made claim but same was rejected and disallowed not for reason that claim was not genuine or was fabricated but in view of provisions of law that assessee did not deduct TDS thereon. It was opined that ratio of judgment in case of Reliance Petro products Ltd (supra) squarely applied to facts of present case and, therefore, levy of penalty was not justified. It was also observed that similar issue had also been considered in case of ACIT vs. Mazda Ltd (2012) 33 CCH 047 (Ahd.) (Trib.), wherein, levy of penalty u/s 271(l)(c) of Act was cancelled which was levied on account of disallowance of claim for deduction of royalty and technical know-how as per section 40(a)(ia) of Act., as assessee failed to deduct TDS on above payments. ratio of said case also applied squarely to present case. In view of above, it was held that levy of 6 ITA No. 2219/Del/2014 AY: 2007-08 penalty, in facts and circumstances of case, was not in accordance with law and same was deleted. ACIT Vs. Medversity Online Ltd. (2012) 69 DTR 326 (Hyd.) (Trib.) Penalty u/s 271(l)(c) was levied on disallowance of expenditure made by invoking provisions of sec. 40(a)(ia). It was held that assessee having furnished all relevant material facts and audit report in statutory form along with its return & also filed explanation which could not be said to be not bona fide, it cannot not be said to be guilty of concealment of income or furnishing of inaccurate particular thereof, merely because certain expenses have been disallowed u/s 40(a)(ia). Further, it is case of honest difference of opinion between assessee and revenue regarding disallowance made & applicability of provisions of section 40(a)(ia). Therefore, no case for imposition of penalty u/s 271(l)(c) can be made out. ACIT vs. Global Associates (Del.)(Trib.) ITA No. 4819/Del./2012 dt. 28.06.2013 "Disallowance u/s 40(a)(ia) and u/s 14A of Act: Both these disallowances made by AO are legal disallowances. No inaccurate particulars were filed as far as claim of deductions is concerned. There was no concealment of any facts with regard to claim of deductions. Complete details were filed during course of assessment proceedings as asked for by A.O. In fact it is on basis of details filed by appellant that A.O. worked out disallowable amounts both u/s 40(a)(ia) and 14A of Act. expenses claimed by appellant were genuine expenses incurred for business purposes and there are no contrary observations by Assessing Officer. disallowance made by A.O. u/s 40(a)(ia) of Act was on account of legal provision and u/s 14A of Act by attributing expenses to tax free income claimed by appellant." . .. A.O. has in last page of his order u/s 271(l)(c) levied penalty on assessee on ground that "assessee has willfully furnished inaccurate particulars of income." Ld. Commissioner of Income Tax (Appeals) held that assessee has furnished all required details and that hence no penalty can be levied on technical/legal disallowances u/s 14A or u/s 40(a)(ia). We on facts of this case agree with these findings of Ld. Commissioner of Income Tax (Appeals). We find no infirmity in 7 ITA No. 2219/Del/2014 AY: 2007-08 conclusions drawn by Ld. CIT(A) on this issue. In result this ground of Revenue is dismissed." 4. only reason given by AO for levy of penalty is that no tax was deducted at all at any point of time, even at later date and thus no tax could be realized from recipient being foreign national thus causing loss to revenue. This cannot be reason for levy of penalty as once tax along with interest is recovered from assessee by raising demand by disallowing expenditure, no loss is caused to revenue. Gujarat High Court in case of CIT Vs. LG Chaudhary 215 Taxman 95 (Magz.) where AO imposed penalty on assessee u/s 271(l)(c) for not deducting and depositing TDS on time, held that where there was no concealment of income or furnishing of inaccurate particulars of income by assessee, nonpayment of TDS being technical default; deletion of penalty was justified. In view of above, penalty levied u/s 271(l)(c) on above disallowance be deleted. B. Penalty in respect of disallowance of depreciation of Rs. 26.138/- u/s 40(a)(i) assessee made payment of Rs. 1,74,254/- to M/s. Henchel Industrietichik for supervision and erection of machine which has been capitalized. It claimed depreciation of Rs. 26,138/- on same being 15% of Rs. 1,74,254/-. AO observed that as tax has not been deducted at source on said payment, claim of depreciation is not allowable. CIT(A) confirmed disallowance. However, Hon'ble ITAT vide Para 7 of its order dt. 21.12.2012 deleted disallowance bv holding since amount paid was not debited to P&L A/c, there cannot be any question of disallowance of depreciation or adding it back to income of assessee on around that it was liable for TDS u/s 40(a)(i). Since disallowance is deleted by Hon'ble ITAT, penalty levied u/s 271(1)(c) on this amount be deleted. 2.4 After considering submission of assessee, learned Commissioner of Income-tax (Appeals) deleted penalty levied on issue in dispute with following findings: 8 ITA No. 2219/Del/2014 AY: 2007-08 5.11. fourth issue on which penalty has been imposed by AO is on issue of non deduction of tax u/s 40(a)(i) on amount of Rs.8,88,053/-. In appeal, addition has been confirmed by Ld. CIT(A) and Hon'ble ITAT. 5.12. appellant had made payments of Rs.4,43,363/- to entity M/s Coperion Werner & Pfeerderer for sending engineer to India for process training. appellant stated that this payment was covered under article 7 and therefore no TDS was required to be made. 5.13. AO stated that TDS was required to be deducted and made disallowance u/s 40(a)(i). addition made by AO u/s 40(a)(i) was confirmed by Ld. CIT(A) and Hon'ble ITAT. Hon'ble ITAT stated that Article 7 will not be applicable. 5.14. appellant had further made payment of Rs.4,44,690/- to Dr. U. K. Thele. This was for scientific services. AO however held that payment was for technical services and subject to TDS and therefore disallowed amount u/s 40(a)(i). Ld. CIT(A) and Hon'ble ITAT up held addition. Hon'ble ITAT observed that payment to Dr. U. Thele was for rendering technical services not falling under Article 14 of DTAA. 5.15. I shall now discuss whether penalty will be imposable on these amounts. All particulars had been furnished by appellant. All facts relating to computation of his total income had been disclosed by him. explanation give by appellant appears to be bonafide. 5.16. As per views of AO, Ld. CIT(A) and Hon'ble ITAT appellant was in default for not deducting TDS. However, there is no concealment of income or furnishing of inaccurate particulars of income. explanation given by appellant stating that no inaccurate particulars were filed has merit. explanation of appellant is bonafide. 5.17. To conclude it was seen that in respect of all issues, all particulars had been furnished by appellant. AO also has not stated that particulars furnished were not correct or inaccurate. 5.18. bonafides of appellant can be seen from fact that details of all expenditure which was claimed were furnished. AO has nowhere stated that appellant had furnished false or 9 ITA No. 2219/Del/2014 AY: 2007-08 fabricated bills or had claimed expenditure not related to business or particulars which were not correct. action of appellant is not deliberate or for concealment of income. There was no concealment of material facts. There was no intention of appellant to conceal income and evade tax and mislead revenue. 5.19 Hon ble Supreme Court of Indian in K.P. Madhusudan Vs. CIT (2011) 118 TAXMAN 324 (SC) held that in circumstances stated in Explanation, if his failure to return his correct income was not due to fraud or neglect, he shall be not deemed to have concealed particulars of his income or furnished inaccurate particulars thereof and consequently be liable to penalty provided by that section. In view of above, onus is on appellant to prove that there was no fraud or neglect in filing correct income, which appellant has proved. 2.5 Before us, learned Senior Department Representative relied on order of Assessing Officer and prayed that order of Assessing Officer might be restored. 2.6. On other hand, learned Authorized Representative of assessee relied on finding of learned Commissioner of Income- tax(Appeals) and submitted that all particulars in respect of claim were filed in return of income or before Assessing Officer and explanation furnished by assessee was bona fide and, therefore, no penalty under section 271(1)(c) of Act could be leviable on issue of disallowance under section 40(a)(i) of Act. learned Authorized Representative also relied on decision of Tribunal in ITA No. 2572 to 2574/Ahd/2011 in case of Sh. Vishal Neeraj Aggarwal versus DCIT, Baroda. 2.7 We have heard rival submissions and perused material on record. From submission of assessee before lower authorities, we find that assessee has filed all particulars in respect of expenses incurred, which has been held to be disallowable under section 40(a)(i) of Act. explanation furnished 10 ITA No. 2219/Del/2014 AY: 2007-08 by assessee in support of its claim of non-deduction of tax at source, though, has not been found correct, however, same was not malafide. According to assessee, payment of Rs.4,43,363/- paid to entity M/s. Coperion Werner & Pfleiderer was covered under Article-7 of DTAA with Germany whereas Tribunal has held that Article-7 was not applicable in case of assessee. Similarly, in respect of payment of Rs.4,44,690/- to Dr. UK Thiele, assessee claimed that payment was towards independent scientific activity which fall under Article 14 of DTAA with Germany, whereas Tribunal held that assessee failed to demonstrate that services rendered by Dr UK Thiele are independent scientific services. Assessing Officer has nowhere stated that assessee has furnished false and fabricated bills or claimed expenditure which was not related to business of assessee. Hon ble Supreme Court in case of CIT Vs. Reliance Petroproducts Private Limited has observed that making incorrect claim in law cannot tantamount to furnishing of inaccurate particulars. assessee has given explanation which is found to be bonafide, thus, in our opinion Explanation -1 to section 271(1)(c) of Act is not attracted in case of assessee and, therefore, no penalty is leviable. Tribunal in case of Sh. Vishal Neeraj Aggarwal (supra) after taking into account decision of Hon ble Gujarat High Court in case of CIT IV Vs. LG Chaudhary reported in (2013) 33 taxmann.com 156 (Guj) held that disallowance under section 40(a)(ia) of Act was due to non-payment of TDS, which was at most technical default, and hence no penalty was leviable. relevant finding of Tribunal is as under: 12. We have heard rival submissions, perused material available on record and gone through orders of authorities below as well as judgement relied upon ld.counsel for assessee. There is no dispute with regard to fact that addition was made on account of non-deduction of tax. Hon ble 11 ITA No. 2219/Del/2014 AY: 2007-08 High Court of Gujarat in case of CIT-IV vs. L.G.Chaudhary (supra), has held as under:- 3. We heard learned counsel, Ms. Paurami Sheth for appellant and senior counsel, Mr. Soparkar for respondent. Learned counsel, Ms. Sheth has argued that Tribunal had failed to see that assessee had failed to deduct IDS as per law which was also deposited late and on such disallowance as has been confirmed by both CIT (Appeals) and ITAT and therefore, imposition of penalty by Assessing Officer was just and proper. Per contra, learned senior counsel submitted that none of elements of Section 271(1 )(c) get attracted in case of respondent assessee. On due consideration of submissions of both sides and on examining orders of all authorities, we find no reason to interfere in this appeal in as much as both authorities namely C1T(A) and IT AT have rightly deleted penalty observing that disallowance was due to non-payment ofTDS, which was at most technical default. There being nothing to indicate any concealment of income or furnishing of inaccurate particulars of income by assessee, Assessing Officer was rightly not justified in levying penalty. 4. This being correct approach adopted by both authorities concurrently, this tax appeal poses no question of law and same requires no interference and is consequently to be dismissed. 13. Therefore, respectfully following judgment of Hon ble Jurisdictional High Court, we hereby direct Assessing Officer to delete penalty on this amount. Thus, this ground is allowed and appeal of assessee for AY 2006-07 is allowed. 2.8 Thus respectfully following above decision no penalty is leviable in case for disallowances towards non-deduction of tax at source. 3. Third disallowance of Rs.26,138/- under section 40(a)(i) has already been deleted by Tribunal and, therefore, no penalty was leviable corresponding to disallowance of Rs.26,138/-. In view of above discussion, we find that order of learned Commissioner of 12 ITA No. 2219/Del/2014 AY: 2007-08 Income-tax (Appeals) on issue in dispute is well reasoned and no interference is required on our part and accordingly we uphold same. grounds of Revenue on issue are dismissed. 4. second issue contested before us is in respect of penalty levied under section 271(1)(c) of Act in respect of disallowance of long-term capital gain of Rs.41,62,154/-. facts in respect of issue in dispute are that in return of income assessee shown long-term capital gain (LTCG) on sale of shares of M/s. Mayuka Investment Ltd. and claimed same as exempt under section 10(38) of Act. Before Assessing Officer, assessee explained that at time of filing of return, assessee was expecting that CBDT would clarify to BSE on matter of STT but no such clarification was issued and as result of which STT was paid on sale of shares, accordingly, assessee offered long-term capital gain (LTCG) for taxation in course of assessment proceeding. This long-term capital gain was adjusted against brought forward long-term capital loss (LTCL). According to Assessing Officer, this addition was not contested in appeal, therefore, he levied penalty under section 271(1)(c) of Act. learned Commissioner of Income-tax (Appeals) held that no inaccurate particulars of income has been filed by assessee and there is no concealment made by assessee and hence no penalty under section 271(1)(c) of Act was attracted in case of assessee. relevant finding of learned Commissioner of Income-tax(Appeals) on issue in dispute is reproduced as under: 5.9 In respect of adjustment of capital gain made by AO it is seen that appellant had shown long term capital gain but had not set off this amount against long term capital loss. AO therefore set off gains and allowed carry forward of balance amount. 5.10 In respect of this, I do not find anywhere as to how inaccurate particulars were furnished. Nowhere has AO claimed 13 ITA No. 2219/Del/2014 AY: 2007-08 that particulars furnished by AO were inaccurate or incorrect. There is no income which was concealed by appellant. appellant has given explanation which in my view is clearly bonafide. In my view penalty u/s 271(1)(c) would not be attracted on this issue. 4.1 Before us, learned Sr. Departmental Representative relied on finding of Assessing Officer and submitted that assessee has filed inaccurate particulars of income and hence penalty was leviable in case of assessee. 4.2 On other hand, learned Authorized Representative of assessee relied on findings of learned Commissioner of Income Tax (Appeals). 4.3 We have heard rival submission and perused material on record. We find that all particulars in respect of sale of shares were duly filed before Assessing Officer. learned Authorized Representative submitted that long-term capital gain (LTCG) was claimed as exempt by assessee at time of filing return, inasmuch as, assessee was of bonafide view that STT would be paid in due course once BSE would get issue clarified from CBDT. correspondence of BSE in this respect was also filed before Assessing Officer. However, since assessee failed to get same clarified until last date of revision of return of income i.e. 31/03/2008, assessee during course of assessment proceeding, without any show cause notice issued by Assessing Officer, offered long-term capital gain (LTCG) for taxation which was accepted by Assessing Officer and he adjusted long-term capital loss (LTCL) from long-term capital gain (LTCG) so offered. This explanation offered by assessee has not been found false by Assessing Officer. Further, assessee substantiated explanation with necessary evidence and explanation filed is bonafide and all facts 14 ITA No. 2219/Del/2014 AY: 2007-08 relating to explanation and material to computation of income on issue have been disclosed by assessee. In view of these facts, Explanation-1 to section 271(1)(c) of Act is not attracted in case of assessee. We may like to repeat findings of Hon ble Supreme Court in case of Reliance Petroproducts Pvt. Ltd. (supra) that making incorrect claim in law cannot tantamount to furnish of inaccurate particulars. Thus, in our opinion, in such circumstances no penalty under section 271(1)(c) of Act is leviable on issue in dispute. We find that order of learned Commissioner of Income-tax (Appeals) on issue in dispute is well reasoned and no interference on our part is required. Accordingly, we uphold same. grounds of appeal on issue in dispute are dismissed. 5. In result, appeal of Revenue is dismissed. decision is pronounced in open court on 5th October, 2016. Sd/- Sd/- (H.S. SIDHU) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 5th October, 2016. Laptop/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi DCIT, Circle-14(1), New Delhi v. M/s. Poddar Pigments Ltd
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